Today the IG dollar DCM hosted 8 issuers across 8 tranches totaling $4.25b. The big story for our nation’s oldest Service Disabled Veteran broker dealer – Mischler Financial Group, Inc., is that we were named a Co-Manager on the day’s two largest issues – Deutsche Bank AG New York Branch’s $1bn 15NC10 fxd-to-fxd Reset Sub Tier 2 Notes and Synchrony Financial’s 10-year Senior Notes new issue. Those two transactions also just happened to account for 47% of today’s IG Corporate issuance! You know what that means? Both DB and SYF are today’s Deals-of-the-Day which I will get to in alphabetical order following a review of an incredible day for markets and geopolitical events risk factors that I strongly advise you stay tuned to.

11/28 – South Korea’s Joint Chiefs of Staff verified that North Korea fired a ballistic missile that landed in the Sea of Japan. This comes 26 days after SOKO’s 11/02 NIS warning of activity at a NOKO nuke facility and expectations of a launch. Situation is “dire” Action needed = “Exclusive “QC” source. SOKO Olympics begin Friday 2/2018 and end Sunday 2/25 = Dates to keep in mind! 11/20 – Pres. Trump announced the U.S. designated NOKO as a state sponsor of terrorism. Warns NOKO that “nuclearization puts its regime in grave danger & increases the peril it faces.”

ELEVATED“Beltway Dysfunction”

11/28 – U.S. Senate Budget Committee advanced the GOP tax reform bill to Senate for debate that could see a vote take place as early as Thursday 11/30. Congress passed the Tax Reform Bill on 11/16 in a 227-205. Strong push to unite all Republicans behind Trump to get tax reform done by year end.

Gaining traction in the Beltway: Atty. Gen. Sessions raised the possibility of special counsel appointment to investigate the Uranium One Deal involving the Clinton Foundation in which a Russian company took control of 20% of entire supply of U.S. uranium supply used to make nuclear weapons in exchange for Clinton Foundation donations. In a decree on March 20, 2020 Russia’s Vladimir Putin, abolished the Federal Agency for Nuclear Power. The public corporation Rosatom (he owns) was vested with the authority to implement on behalf of the Russian Federation the rights of shareholders in the joint-stock companies in the nuclear energy industry. In 2013 Rosatom retained full ownership. Matter of U.S. national security.

CAUTION

MENA & EU

11/28 – Israeli Mossad working with Saudi’s General Intelligence Presidency (GIP) over mounting tensions with Iran. Shared interests against Iran are bringing both nation’s closer. Lebanon’s PM al-Hariri resigned from Saudi Arabia 11/05 blaming Iranian aggression. Abandons support of Iran’s Hezbollah terror group. Beirut, is proving ground for Saudi-Iranian proxy wars. Consolidation of KSA power with Crown Prince Mohammed bin Salman breeds sweeping change in the Kingdom called “Vision 2030” to wean KSA off oil. bin Salman leadership saw more than 50 Saudi inner players arrested in anti-corruption probe including Prince Alwaleed bin Talal, Saleh Kamel & Khalid al-Tuwaijri to show he is clearly in charge. Trump and House of Saud are close. Both share strong views on an anti-nuclear Iran. KSA needs oil above $81 to break even. “Tensions” will surely boost the price of a barrel of “black gold.”

Negotiators reached agreement in principle on EU settlement demand or BREXIT “divorce bill.” Amount is heard to be in a €45b to €55b range down from the €60bn that the EU initially demanded. This breaks the deadlock and should promote further Dec. & Jan. negotiations. U.K. withdrawal from EU takes place in 3/2019. Moody’s downgraded the UK on 9/22 to Aa2 from Aa1. Critical that PM Theresa May has shown an ability to effectively.

Spain’s Rajoy announces snap elections on Dec. 21st to help defray the Catalonian independence crisis. Could result in breakaway = could spread thru EU. Former Catalan Pres. Puigdemont to appear in court 11/17. On 11/02: 8 Catalan gov’t. members jailed in Spain for role in independence rebellion & sedition.

The Caliphate is destroyed but ISIS is now scattered across a wider region including Europe. November MTD Terror Stats a/o 11/27:39 terrorist attacks; 766+ dead; 705+ wounded.

MODERATE“China”

China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. Debt is 250% of GDP. National Congress of the Chinese Communists Party confirms Xi Jinping as its most powerful leader since Mao. Xi loyalists make up inner sanctum of Chinese politics into the next decade. 6% GDP in 2018 will be difficult.

Mischler Financial Group, Inc., the nation’s oldest Service Disabled Veteran broker dealer was honored today to serve on today’s $1b Deutsche Bank AG/New York Branch 15NC10 fixed-to-fixed Reset Subordinated Tier 2 Notes new issue. We thank Team DB for selecting Mischler as a Junior Co-Manager from among the host of diversity firms in our industry.

For the DB fair value study I looked at the outstanding 4.296% 15NC10 Global Sub Notes (5/24/2028) that was 4.63% to call or 4.70 YTM which is equal to T+237 vs. T10. Adding 9 bps to account for the swap curve from 2028s to 2032s gets you to T+246 pegging NIC on today’s T+255 print at 9 bps. A personal “thank you” to Margaret Szczerbicki!

Use of proceeds from today’s transaction will be used for general corporate purposes.

DB Issue

IPTs

GUIDANCE

LAUNCH

PRICED

Spread
Compression

NICs
(bps)

Trading at
the Break

+/-
(bps)

15nc10
fxd-to-fxd
12/01/2032

+280a

+260a (+/-5)

+255

+255
Reset 5yr
MS +255.3

<25> bps

9

250/247

<5>

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand:

Mischler Financial Group, Inc., is proud to announce that it also served as an active 1.00% Co-Manager on Synchrony Financial’s $1bn 10-year Senior Notes new issue today. We have enjoyed a longtime partnership with Synchrony.

For the Synchrony Financial relative value study I looked to the outstanding SYF 3.70% Senior Unsecured Global Notes due 8/04/2026 that were T+148 (G+153) pre-announcement. Adding 5 bps for the extension from the SYF 8/2026 to today’s SYF 12/2027 gets us to G+158 landing on today’s +165 print as 7 bps.

Use of proceeds from today’s transaction will be used for general corporate purposes.

SYF Issue

IPTs

GUIDANCE

LAUNCH

PRICED

Spread
Compression

NICs
(bps)

Trading at
the Break

+/-
(bps)

SYF 10yr

+180a

+165 the #

+165

+165

<15> bps

7

165 (issue bid)

0/flat

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand: